One of the quaintest practices of American business — the stock dividend — is hot again

American corporations are sitting on an unholy pile of cash. About $2 trillion. It's an all-time record, and as a percentage of total assets, it's the highest in more than 50 years. I would argue that this wad of dough actually greatly exceeds even the pileup of the late 1950s, because of the reason it exists. Past cash hoardings were strategic in nature. They funded the expansion of product lines, plant buildings, technological innovation, and hiring that we witnessed in the mid-'60s, for example, after President Kennedy dramatically lowered the personal income tax.

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This time is different. The current stockpile isn't strategic; it's fearful. Companies are afraid to expand because of uncertainty about costs, and a lack of lending partners. They're not using these wheelbarrows of money to take advantage of a marketplace dramatically tilted toward employers in an antiunion, low-wage, corporate-tax-hating, government-incentive-granting environment, in which states will drop their pants to offer incentives that don't work (Evergreen Solar accepted $76 million from Massachusetts starting in 2007 only to fire 800 workers and move to China four years later) or aren't needed (like the dough broke-ass California shelled out to Twitter, as though Twitter could exist anywhere but San Francisco).

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Today, most of the companies sitting on the most cash are making a huge mistake. When the tobacco companies built up cash just as the government found a way into their underpants, they helped fulfill the prophecy. The government took $206 billion from the industry (and state officials predictably used a lot of that not for smoking-cessation programs but to prop up their budgets, which helped them get reelected but is breaking their backs now).

I believe the exact same thing is about to happen to energy companies.

Energy is fundamentally different from tobacco, of course. Every single American uses fossil fuel, and most of us use a lot of it. The oil companies have an unreal amount of money just sitting there. That creates an irresistible target for a federal government that has increased spending enormously, has produced an overall debt equal to our entire economy, and faces an unmanageable deficit.

Companies are starting to recognize this. They're starting to raise their dividends. Since they can't figure out ways to hire new workers or smartly deploy capital (a devastating failure of the imagination), they're mailing checks to shareholders instead. The fact that huge salary packages for CEOs have come under scrutiny and those same CEOs tend to be large shareholders (and thus receive the biggest dividend checks) might also figure into their "strategic" thinking.

Throughout the '90s, investors looked down their noses at high-dividend payers. Sending your cash outside the company was a capitulation, an admission that the days of heady growth were behind you. Investors looking for high growth shunned the little-old-lady dividend stocks. But today, the cash hoards have gotten so unmanageable and growth opportunities so cheap, based on a shrinking world and beaten-down workers, that a well-run company can afford to do both. It can pay high dividends and still have plenty of money left over to fund growth. Companies such as El Paso Pipeline Partners (yield is 44 cents a share), Martin Midstream Partners (76 cents), and Magellan Midstream Partners (76 cents) are all yielding about 5 percent.

A lot of these companies happen to be in the filthy business of oil and oil exploration. And therein lies the single best opportunity to buy a stable, safe stock with a great yield, low price, and the opportunity for growth.

Chevron.

How can the second-biggest energy company in the U. S. have room to grow? For one thing, Chevron is sitting on an ocean of cash — enough to pay every penny of debt and still have about $6 billion left over. Furthermore, with a PE of 10 and a forward PE of only 8.8 (compared with Exxon's 11.6 and ConocoPhillips's 10.6), the stock is cheap for a company that's grown earnings nearly 9 percent a year over the last ten years. Compare that with the S&P as a whole, which has a PE of 15.6 but a growth rate of only 4.9. Throw in the fact that Chevron's dividend of 3 percent is almost twice that of the S&P and its debt-to-equity is five times lower (10 versus 49) and you're looking at a stock that is ridiculously affordable, even as it trades near its three-year high. Add to this picture Chevron's record as one of the safest operators and the company's great opportunities in relatively stable places like Thailand, Australia, Vietnam, and the UK, and it's hard not to love this stock.